Members of the House Appropriations Committee heard testimony recently on a constitutional amendment designed to foster more responsible management of Michigan's budget and help prevent future deficits, said sponsor Sen. John Pappageorge. "I was honored to share the details of my legislation with an open-minded House Appropriations Committee," said Pappageorge. "The state government must start balancing its budgets like Michigan residents do - we shouldn't spend money we don't have. My resolution will simply prevent the state from treating an estimate the same as actual money in a drawer. We need to get real about the state's financial picture and this is a step in the right direction." Senate Joint Resolution E would limit the governor from proposing a budget greater than 96 percent of the estimate presented at the January Consensus Revenue Estimating Conference.
The Legislature, in turn, could not approve a comprehensive budget greater than 96 percent of the January estimate. The restriction is applied only to General Fund and School Aid Fund money and is transferable between budgets. This allows resources to be prioritized, as long as the two budgets combined are no more than 96 percent of the estimate.
A 10-year moving average of consensus revenue estimates to actual revenues revealed that revenues have come in at 96 percent of estimates. For the past five years the Legislature spent a considerable amount of time and energy finding ways to make up the difference by borrowing or raising taxes. "Senator Pappageorge has combined a shrewd diagnosis of our state's fiscal dysfunction with a common-sense prescription for reform," said Rep. Chuck Moss, R-Birmingham, a member of the House Appropriations Committee. While the fiscal analysts do fine work in Pappageorge's opinion, the estimates are never reliable because no matter how sophisticated the manipulation, the data is still inadequate.
According to Pappageorge, part of the problem lies in the misconception that the January estimate is perceived to be a revenue promise to all those receiving state funding. The estimate "promise" is 22 months away from becoming actual revenue and consistently falls short of expectations. If implemented, SJR E should improve Michigan's bond rating.
The Legislature, in turn, could not approve a comprehensive budget greater than 96 percent of the January estimate. The restriction is applied only to General Fund and School Aid Fund money and is transferable between budgets. This allows resources to be prioritized, as long as the two budgets combined are no more than 96 percent of the estimate.
A 10-year moving average of consensus revenue estimates to actual revenues revealed that revenues have come in at 96 percent of estimates. For the past five years the Legislature spent a considerable amount of time and energy finding ways to make up the difference by borrowing or raising taxes. "Senator Pappageorge has combined a shrewd diagnosis of our state's fiscal dysfunction with a common-sense prescription for reform," said Rep. Chuck Moss, R-Birmingham, a member of the House Appropriations Committee. While the fiscal analysts do fine work in Pappageorge's opinion, the estimates are never reliable because no matter how sophisticated the manipulation, the data is still inadequate.
According to Pappageorge, part of the problem lies in the misconception that the January estimate is perceived to be a revenue promise to all those receiving state funding. The estimate "promise" is 22 months away from becoming actual revenue and consistently falls short of expectations. If implemented, SJR E should improve Michigan's bond rating.
